Things are getting crowded in the cloud. More accurately, data centers are running out of room on the ground.
According to the market research firm datacenterHawk, the market for data centers in the United States and Canada is facing “record-high demand.”
Internet users may not stop to think that there is a geographical aspect to cloud computing. While virtual technology has relieved many offices and homes of the need for clunky computing equipment, at some point all that technology must be stored and processed on a physical computer, somewhere.
That’s where data centers come in. As cloud computing has become commonplace, the need for data centers has grown tremendously.
High demand and low inventory (meaning available space) have resulted in a vacancy rate in major North American markets of just 2.88%, according to datacenterHawk’s 1Q 2023 Data Center Market Recap. In the secondary markets, the figure is only slightly higher, at 5%.
DatacenterHawk describes the North American market for data centers at “near capacity.” A combination of factors, including power limitations, supply chain issues and rising costs, have helped to constrain the market.
The squeeze in the market has resulted in higher rental prices and a migration to new geographical markets. According to datacenterHawk, North American activity is often concentrated in 2-3 primary markets. That has changed recently as demand has spread out.
For example, the research firm notes some companies that were considering Northern Virginia for their requirements are now opting for alternative locations such as Atlanta or Columbus, Ohio. Similarly, constraints in California are pushing companies toward cities like Las Vegas, Salt Lake City or Denver.
DatacenterHawk also observes that the Latin American data center industry is absorbing some of that spillover, with demand expected to increase by a factor of six in countries like Mexico, Chile, Brazil and Colombia over the next decade.